Retail gas prices have climbed for five straight days, and experts say they're likely to hit $3 a gallon this summer. The futures contract for gasoline also fetched the highest price in more than a month as investors looked ahead to the summer driving season.
Oil prices rose above $80 a barrel Monday as investors expect the U.S. central bank to keep interest rates near zero to help fuel economic growth — which would boost crude consumption. Prices also were propped up by a festering refinery strike in France.
Benchmark oil for March delivery added 35 cents to settle at $80.16 a barrel on the contract's final day of trading on the New York Mercantile Exchange. Most of the trading volume already has shifted to the April contract, which added 25 cents to settle at $80.31 a barrel.
Prices were generally mimicking changes in the dollar's exchange rate. The dollar makes oil less attractive to investors holding other currencies when it strengthens and makes crude cheaper for them when it weakens.
The euro was up to $1.3608 in late New York trading from $1.3599 on Friday.
Investors are betting that a low inflation rate and weak employment figures will lead the Federal Reserve to keep interest rates low.
Consumer prices edged up 0.2 percent in January, the Labor Department said Friday, and excluding volatile food and energy, prices fell 0.1 percent, the first monthly decline since December 1982.
"There's hardly any fear of inflation right now," said Victor Shum, an energy analyst with consultancy Purvin & Gertz. "So the thinking is the Fed will keep interest rates near zero."
A strike by workers at oil refineries in France, where workers angry about the uncertain future of a Total SA plant have shut down over half of the country's refining capacity, was also seen supporting prices.
"At the moment, France still has stockpiles of 10 to 20 days of demand available ... meaning that any widespread fuel shortages are unlikely to materialize in the next couple of days," said JBC Energy in Vienna. "However, as there is currently no end in sight to the strike ... the situation could become worse in the foreseeable future."
The standoff already has led to gasoline shortages in parts of the country, and it appears to be spreading. Refinery workers at Exxon Mobil Corp.-owned Esso France are expected to join the walk out Tuesday, and workers at British-owned chemical company INEOS also plan to strike.
Daily fluctuations notwithstanding, oil has jumped over $10 from its Feb. 5 price of $69.59 a barrel.
Still, doubts about the strength of demand are still weighing on the market.
In other Nymex trading in March contracts, heating oil rose less than a penny to settle at $2.0788 a gallon, and gasoline gained 3.01 cents to settle at $2.1158 a gallon. Natural gas dropped 14.9 cents to settle at $4.895 per 1,000 cubic feet.
In London, Brent crude added 42 cents to settle at $78.61 on the ICE futures exchange.